There are various investment options available with the India Post. Among them is the Post Office Monthly Income Scheme (POMIS). Under the POMIS, the investor will get interest payments every month. The interest rate for this program is revised by the government every quarter. According to news reports, as of early February, collection from POMIS rose to nearly Rs 20,000 crore against Rs 5,000 crore in FY23.
Here is a look at important features of the Post Office Monthly Income Scheme as per the India Post website.
Who can invest in POMIS
(i) a single adult
(ii) Joint Account (up to 3 adults) (Joint A or Joint B))
(iii) a guardian on behalf of minor/ person of unsound mind
(iv) a minor above 10 years in his own name.
What is the minimum amount for opening of account and maximum balance that can be retained?
- In multiples of Rs 1,000.
- Maximum investment limit is Rs 9 lakh in a single account and Rs 15 lakh in a joint account.
- An individual can invest a maximum Rs 9 lakh in MIS (including his share in joint accounts)
- For the calculation of the share of an individual in a joint account, each joint holder has equal share in each joint account.
- Deposits/shares in all MIS accounts opened by an individual shall not exceed Rs. 9 lakh.
- Limit for account opened on behalf of a minor as guardian shall be separate.
What is the interest rate payable and periodicity of POMIS?
- For the January to March 2024 quarter, the POMIS interest rate has been set at 7.4% per annum payable monthly.
- Interest shall be payable on completion of a month from the date of opening and so on till maturity.
- If the interest payable every month is not claimed by the account holder such interest shall not earn any additional interest.
- In case any excess deposit made by the depositor, the excess deposit will be refunded back and only PO Savings Account interest will be applicable from the date of opening of account to the date of refund.
- Interest can be drawn through auto credit into savings account standing at same post office, or ECS. In case of MIS account at CBS Post offices, monthly interest can be credited into savings account standing at any CBS Post Offices.
Is the interest rate earned taxable?
Interest is taxable in the hands of the depositor.
What are the tax benefits of POMIS?
POMIS, unlike many other post office schemes, is not covered under section 80C of the Income-tax Act, 1961.
Tenure of Post Office Monthly Income Scheme
Account may be closed on expiry of 5 years from the date of opening by submitting prescribed application form with pass book at concerned Post Office.
In case the account holder dies before the maturity, the account may be closed and amount will be refunded to nominee/legal heirs. Interest will be paid up to the preceding month, in which refund is made.
Can POMIS account be prematurely closed?
- No deposit shall be withdrawn before the expiry of 1 year from the date of deposit.
- If account is closed after 1 year and before 3 year from the date of account opening, a deduction equal to 2% from the principal will be deducted and remaining amount will be paid.
- If account closed after 3 year and before 5 year from the date of account opening, a deduction equal to 1% from the principal will be deducted and remaining amount will be paid.
- Account can be prematurely closed by submitting prescribed application form with pass book at concerned Post Office.